Chancellor Alistair Darling today warned that the slowdown in the UK economy will be more prolonged than the Government had initially anticipated a year ago.

Mr Darling made his prediction as he addressed questions about Northern Rock, the nationalised bank, which, it emerged today, has put taxpayers at further risk of losing billions of pounds by converting £3 billion of debt into equity.

The Chancellor told BBC Radio 4's Today programme that "difficult situation" the UK and "other countries" are facing "is going to continue for some time", and said: "It will be more prolonged than we thought a year ago".

Mr Darling insisted the Government was "doing everything we can" to help Britons through the current economic slowdown but declined to comment on whether Labour would cut or abolish stamp duty on home purchases, saying only he was looking at "a number of measures".

Mr Darling said that the Government would not change the criteria that the Bank of England uses to decide on interest rates to include future forecasts of inflation as well as current figures.

The Bank of England's Monetary Policy Committee will meet this week to decide on interest rates, which are widely expected to remain at 5 per cent.

The Chancellor also appeared to rule out a windfall tax on energy companies, which are putting up household energy bills at the same time as reporting millions of pounds worth of profits.

Last week, Centrica, which owns British Gas, announced that it would increase gas bills by 35 per cent and electricity by 9 per cent. Days later, it revealed a £992 million interim profit.

Commenting on a windfall tax, Mr Darling said: "There are two problems with that and they are the principle and the practicality.

"Two years ago, people were calling for a windfall tax on the banks. I don't think anyone would want to see that today."

Instead, Mr Darling said, the Government is focusing on reducing fuel poverty in the UK, where a household spends more than 10 per cent of its budget on energy bills.

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